Economy

Elon Musk says Tesla will cut 9% of its workforce

Elon Musk says Tesla will cut 9% of its workforce

Elon Musk is cutting 9 per cent of the workforce at Tesla Inc., a turnabout that underscores the mounting pressure he is under to show the electric-car maker can one day turn a profit.

Musk confirmed the job cuts on social media after an internal email became public. The firm has a sector weight rating and a $300 "fair value" price target on Tesla shares, which were up about 4% in pre-market trade Tuesday.

Of late, it has faced questions about its ability to ramp up production, especially of its Model 3, the lower-priced sedan the company is counting on to drive sales.

Musk's note also said that Tesla will end distribution of its solar power and home battery equipment at Home Depot and focus on direct sales instead.

The company will now focus on selling its energy products in its stores and on its website, Musk said.

Following the news, Tesla stock climbed more than 6%.

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The announcement came in an email Musk sent to employees about a series of layoffs Tesla began this week.

Tesla has been facing mounting pressure from investors to ramp up production of its first affordable auto model, the Model 3.

Tesla has been burning cash nearly continuously since it was founded 15 years ago.

Tesla employees based at US DIY chain Home Depot and involved with the home solar business Tesla acquired when it bought SolarCity are among those affected, he said. "I'm deeply grateful for your many contributions to our mission". Tesla (TSLA) is still hiring for key positions and will increase its production staff. "It is very hard to say goodbye", the CEO wrote. Musk said Tesla is making the move now so it never has to do it again. In order to minimize the impact, Tesla is providing significant salary and stock vesting (proportionate to length of service) to those we are letting go.

To those who are departing, thank you for everything you've done for Tesla and we wish you well in your future opportunities.

"We are conducting a comprehensive organizational restructuring across our whole company", Musk wrote in the memo.